How India’s IT sector can thrive amid Trump’s H1B roadblock
When the US administration recently announced a staggering $100,000 fee on new H1B visa applications, it sent shockwaves across the global technology sector. For India, whose IT industry has long relied on the H1B programme to deploy skilled professionals to the United States, the announcement initially triggered alarm. The immediate concern was clear: such an unprecedented increase in costs could disrupt the business models of Indian IT firms, undermine competitiveness, and severely limit opportunities for talented professionals seeking positions in Silicon Valley and other US tech hubs. Yet, as the initial shock subsides, a deeper perspective emerges. What appears to be a formidable barrier may, in fact, represent a historic opportunity for India’s technology sector. By compelling a reconsideration of the decades-old dependence on sending talent abroad, the new H1B fee could catalyse structural changes that strengthen domestic innovation, retain top talent, expand offshore delivery capabilities, and reposition India as a global technology powerhouse.
The immediate financial implications are undeniable. Analysts estimate that large Indian IT firms could face additional immigration costs ranging from $150 million to $550 million annually. For companies that operate with already thin project margins, this is a substantial disruption. However, India’s IT sector has consistently demonstrated resilience in the face of external shocks. From navigating the Y2K scare to weathering the 2008 global financial crisis, the industry has repeatedly turned crises into opportunities, recalibrating business models and emerging stronger. This latest challenge is likely to follow the same trajectory. Instead of sending large numbers of engineers to the US at prohibitive costs, companies are expected to increasingly execute projects domestically. India’s vast pool of highly skilled professionals can deliver world-class results at a fraction of the expense, making it economically sensible to shift project execution home.
This recalibration transforms India from a support base into the core engine of global technology delivery. A key driver of this transformation is the growth of Global Capability Centres (GCCs), also known as captive centres. These offshore hubs, established by multinational corporations to manage technology, innovation, and back-office functions, already represent a $60 billion industry in India, employing more than 1.6 million professionals. Rising costs of US staffing will further tilt the balance in India’s favour. Projections suggest GCCs could grow into a $100 billion sector by 2030, providing employment for nearly three million people. This is more than revenue growth — it signals a structural realignment in global technology delivery, with India emerging as the anchor point for multinational operations. Perhaps the most profound long-term effect of the H1B order lies in its potential impact on India’s talent pool. For decades, some of the country’s brightest minds migrated abroad, particularly to Silicon Valley, in search of better opportunities. This outward flow created innovation gaps at home, depriving India of the ability to fully harness its intellectual capital. The steep visa fee may reverse this trend, encouraging talented professionals to remain in India or return from abroad. Such repatriation could significantly strengthen India’s position in emerging technologies including artificial intelligence, cybersecurity, semiconductor design, financial technology, and advanced software engineering.
Historical precedent supports this expectation. Earlier US visa restrictions led to a 27 per cent increase in foreign affiliate employment within India, translating into high-value domestic jobs. By creating meaningful opportunities locally, Indian IT firms can retain talent and deploy it to develop globally competitive solutions from Indian soil, thereby transforming the perceived disadvantage of US policy into a strategic advantage. The visa disruption also compels companies to rethink broader business strategies. With nearly 57 per cent of Indian IT export earnings currently concentrated in the US, the industry is vulnerable to policy shifts in Washington. The new fee serves as a catalyst for geographic diversification, encouraging firms to expand into Europe, Asia-Pacific, the Middle East, and Africa, while exploring nearshoring options in Canada and Mexico. By spreading risk and broadening their global footprint, Indian IT companies can enhance resilience and strengthen influence across multiple markets.
Simultaneously, rising costs of onsite staffing will accelerate technology-driven efficiencies. Companies are likely to invest more aggressively in automation, artificial intelligence, machine learning, and cloud-based delivery models. Reducing dependence on the physical relocation of workers enhances productivity, scalability, and speed, transforming India’s IT sector into a leaner, digitally empowered powerhouse. What was intended as a barrier thus becomes a catalyst for operational innovation.
Government intervention will be crucial in converting this challenge into a long-term advantage. Strategic facilitation through capital, infrastructure, and policy support can amplify the benefits. A professionally managed, multi-billion-dollar “Viksit Bharat Innovation Fund” focused on deep-tech and frontier technologies could provide critical seed and early-stage capital, particularly for ventures led by returning professionals or domestic innovators in high-risk, high-reward sectors such as semiconductors, biotechnology, and clean energy.
Policy frameworks that ease the return of global talent will further strengthen the ecosystem. A dedicated “Brain Gain Portal” could provide a one-stop platform for visas, taxation, intellectual property protection, and business registration, reducing friction and signalling that India is ready to nurture and scale global talent. Combined with initiatives like Digital India and Make in India, such measures would ensure that India does not rely solely on remittances but builds long-term, value-generating assets.
Ironically, US policy may deepen America’s reliance on Indian technology services.
As visa restrictions limit access to foreign talent, US firms may increasingly turn to India-based delivery models. What was designed to protect domestic jobs could instead enhance the strategic importance of Indian professionals and technology. Meanwhile, the US could face talent shortages in healthcare, education, and specialised tech sectors, with potential long-term consequences for innovation and competitiveness.
While short-term adjustments will involve financial strain and strategic recalibration, the long-term potential is far more significant. Each project retained in India strengthens the domestic ecosystem; each returning professional enhances innovation capacity; each expanded GCC consolidates India’s global influence. The visa disruption may become a springboard for higher growth, deeper innovation, and a more self-reliant technology sector.
India’s IT industry has repeatedly turned challenges into opportunities — from Y2K to the 2008 financial crisis. The H1B disruption is likely to follow the same path. By retaining talent, embracing automation, diversifying markets, and aligning with government-backed innovation initiatives, Indian IT can not only weather the disruption but emerge stronger than ever. What was intended as a barrier — a $100,000 H1B fee-may, paradoxically, become the spark that ignites India’s next era of technological leadership, driven not from Silicon Valley, but from Bengaluru, Hyderabad, Pune, and Gurugram.
Sandeep Joshi is a freelance journalist
